VW in crisis: IG Metall calls possible austerity measures a “poison list”

Volkswagen gave concrete details about its savings plans for the first time at the second round of collective bargaining in Wolfsburg. In it, VW negotiator and brand HR director Arne Meiswinkel confirmed, among other things, the demand to reduce collective wages by ten percent, as both sides announced after a good six hours of negotiations in Wolfsburg. Meiswinkel did not provide any further information on possible plant closures and workforce reductions. Meanwhile, the company reported weak numbers.

From July to September there was a massive drop in profits. The consolidated profit after taxes fell by 64 percent to 1.58 billion euros compared to the same period last year, while the result from ongoing business fell by 42 percent to 2.86 billion euros. Sales, on the other hand, were only slightly below the previous year’s level, despite a drop in sales of seven percent.

In the negotiating room, VW mentioned numerous other points, including reducing the number of training positions, said IG Metall negotiator Thorsten Gröger. “The list of poisons that Volkswagen presented to us is relatively long.” With regard to the wage reduction demanded by VW, he said: “What Volkswagen is presenting here would of course be a brazen grab into the employees’ wallets and not a viable option. These are not lines that we can follow.”

At the same time, he welcomed the fact that VW was now willing to negotiate a future for all locations without factory closures and mass layoffs. “This fundamental, albeit weak, signal was the minimum condition that the company had to fulfill in order for IG Metall to remain at the negotiating table. Otherwise we would have broken off the talks!” Warning strikes at Volkswagen would also be possible from December 1st.

Volkswagen is “open to any meaningful discussion to achieve the financial goal,” said VW negotiator Meiswinkel. The prerequisite, however, is that the savings targets set by VW are achieved overall. “Only if we find solutions together to achieve our financial goals “We can also imagine concrete prospects for the German locations and possible job security.” Details will initially be discussed in three commissions. VW and the union want to meet for the next round of collective bargaining.

At the same time, Meiswinkel defended the tough austerity measures. “The situation is getting worse,” he said before the talks began. “As a result, we have to increase our efficiency and reduce our costs.” Because, says Meiswinkel: “Only those who operate successfully can offer secure jobs.”

The ailing core brand VW made more sales in the third quarter than a year earlier, but operating profit fell significantly. “This shows the urgent need for significant cost reductions and efficiency improvements,” said CFO Arno Antlitz, referring to the brand’s weak return on sales of just 1.8 percent.

Works council boss Daniela Cavallo, who sits at the negotiating table for IG Metall, dampened hopes of a quick agreement at the negotiating table. Plant closures and mass layoffs are still not off the table. “Accordingly, I also caution against interpreting this as a first approximation,” she said. “Today is at best the starting signal for a marathon in which both sides have finally understood that they have to reach the finish line together.” But, Cavallo continued: “Now at least something is on the negotiating table – even if it is miles away from what we had in mind.”

Cavallo reported on Monday about VW’s plans to close at least three plants in Germany and cut tens of thousands of jobs. The group itself has not yet confirmed the information. The VW company tariff applies to around 120,000 employees at the six large West German VW locations.

Cavallo calls on the group to work together to develop a future concept for the group. “Every crisis has always been overcome together with the works council and IG Metall. And that’s exactly the path we want to take.” The works council also does not fail to recognize that “we are in a difficult situation”. We also want to take this situation into account. But Cavallo added, “There’s a lot more to it than just talking about labor costs and factory costs.” However, the group is not yet ready for this.

According to “Handelsblatt”, VW’s planned wage waiver alone is expected to bring about two billion euros in savings. The salary reduction of ten percent would bring in almost 800 million, and a further 1.2 billion would come from the cancellation of various bonus payments and surcharges as well as zero rounds in the coming years. This means that more than half of the total planned savings of almost 3.6 billion euros should be achieved through wage cuts alone. The company has not yet commented on this.